"Socialist Capitalist" businessman Ephren Taylor charged with fraud

By Jonathan Stempel

A self-described “Social Capitalist” who has appeared on national TV talk shows was charged on Thursday with fraud by the U.S. Securities and Exchange Commission for an alleged US$11 million Ponzi scheme that targeted socially-conscious churchgoers.

The SEC said Ephren Taylor II fraudulently sold $7 million of notes said to bear 12% to 20% annual interest rates, to fund small businesses such as laundries, juice bars and gas stations.

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It said Taylor, 29, also raised $4 million by selling “sweepstakes” machines loaded with casino-style games, with promised returns of 72% to 2,400% per year.

The SEC said Taylor’s company, City Capital Corp, would promise to donate some revenue to charity. In reality, according to the complaint filed in Atlanta federal court, Taylor diverted money to promote his books, hire image consultants, fund his wife’s singing career, and pay his bills.

The SEC said Taylor had touted himself as the youngest black chief executive of a public company, and the son of a Christian minister who emphasized the importance of “giving back.”

It said he had conducted a multi-city “Building Wealth Tour” in which he spoke to congregations such as the New Birth Missionary Baptist Church in Lithonia, Georgia, and appeared on TV programs suc h as “The Montel Williams Show” and “The Big Idea with Donny Deutsch.”

“Ephren Taylor professed to be in the business of socially-conscious investing,” David Woodcock, director of the SEC office in Fort Worth, Texas, said in a statement. “Instead, he was in the business of promoting Ephren Taylor.”

According to the SEC, more than 100 investors including from the New Birth church bought the notes, while more than 250 investors bought the machines. It said the scheme ran from 2008 until late 2010, when new funds dried up.

Taylor and City Capital could not immediately be located for comment. A lawyer for co-defendant Wendy Connor, 43, who was City Capital’s chief operating officer, did not immediately return a call seeking comment. A spokesman for New Birth did not immediately return a call seeking comment.

According to the SEC, Taylor’s whereabouts are unknown, his last known residence was in New York City, and he failed to respond to multiple subpoenas.

It said City Capital now purports to be in the roofing and solar panel business through its ERX Energy unit. ERX contact information could not immediately be found, and a spokesman who represented ERX as recently as July said he no longer does.